Pink Home Loans has introduced a one-year discounted rate flexible buy-to-let mortgage that allows borrowers to buy up to 10 properties.
The mortgage has a 1 per cent discount until May 1, 2003, which gives a current payable rate of 5 per cent. It is available for loans of up to 85 per cent of valuation up to a maximum of £250,000 for each property and the total maximum advance is £2.5m.
Under the flexible terms of the mortgage, borrowers can overpay, underpay, take payment holidays of up to six months and make lump sum withdrawals of at least £500. Interest is calculated on a daily basis and there is no penalty for early redemption.
Research from the Council of Mortgage Lenders in March 2002 shows that the average loan-to-value of buy-to-let mortgages is 80 per cent, which makes the Pink Home Loans product unusual.
According to Business Moneyfacts, the Pink Home Loans mortgage is the only mortgage of its type. The closest competitor is from Skipton Building Society, which has a one-year discounted flexible buy-to-let for loans of up to 80 per cent of valuation.
The Skipton mortgage has a 0.3 per cent discount, giving a current payable rate of 5.4 per cent. This is less competitive than the Pink Home Loans deal and it also limited in some areas. Borrowers can only make overpayments and take payment holidays, although interest is calculated daily. They are also restricted to a maximum of three properties within a total advance of £1m.
However, unlike the Pink Home Loans product, there is no limit on each individual property within the total advance, so borrowers looking for properties of over £250,000 may find the Skipton mortgage appropriate.